December 9, 2023

Slide Insurance Company returned to the catastrophe bond market for the second time, seeking an additional $100 million in named storm reinsurance protection through the Purple Re Ltd. (Series 2023-2) transaction.

sliding insurance signSlide is a full-stack homeowners insurtech company founded by former Heritage CEO Bruce Lucas.

The insurer made its first foray into the catastrophe bond market in April 2023, securing $100 million in named storm reinsurance from its inaugural sponsored Purple Re 2023-1 catastrophe bond offering.

Now, Slide is back, and one driver may be its growing portfolio of homeowner property exposures in hurricane-affected states.

As we reported earlier this week, Slide is one of the insurers planning to buy property policies from Florida Citizens this summer, which will increase its Florida exposure.

This second Purple Re cat bond is largely exposed to Florida and thus will provide reinsurance that can support growth in Slide’s home state.

This is a very similar deal to Slide’s first Purple Re cat bond, covering the same risks but with slightly higher risk in the tower, the 2023-1 cat bond will insure this new bond.

We have been told that Purple Re Ltd. will issue a single tranche of Series A 2023-2 notes with an initial size of US$100 million.

The notes will be exposed to named storm losses in Florida and South Carolina, but as we said, most of the expected losses are said to be in Florida, where Slide has the largest portfolio and grows with the Citizens acquisition.

We understand that reinsurance protection for this Purple Re 2023-2 catastrophe bond will be provided on an indemnity trigger and per incident basis for a period of less than three years with a maturity date set for June 5, 2026.

Attachment is said to be $315 million and depletion is $415 million, meaning there is no room for growth in this cat bond.

However, since the notes have both FHCF and state-backed reinsurance, as well as the 2023-1 series of notes, the effective add-on point will be higher on a basis of just over $850 million, which are set to sit at the top of the Slide reinsurance tower.

The $100 million Purple Re Series 2023-2 Class A Notes have an initial attachment probability of 1.12% and an initial base expected loss of 1.05%.

The spread guidance for the notes ranged from 10.5 percent to 11.5 percent, the sources said.

Given that these 2023-2 notes will sit above the 2023-1 notes in the reinsurance tower, and the 2023-1 notes are priced at a 12.25% spread, it appears that these new Purple Re notes will also be priced within the guidance range.

It is encouraging to see another sizable new insurer looking to make catastrophe bonds a larger component of its reinsurance as it expands its portfolio.

You can read all about this new Purple Re Ltd. (Series 2023-2) cat bond and over 900 other cat bond deals in our extensive Artemis deals directory.

Print friendly, PDF and email